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Calculate and label the market risk premium on the axes

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Reference no: EM131107316

Assume that the risk-free rate, RF, is currently 9% and that the market return, rm, is currently 13%.

a. Draw the security market line (SML) on a set of "nondiversifiable risk (x axis)-required return (y axis)" axes.

b. Calculate and label the market risk premium on the axes in part a.

c. Given the previous data, calculate the required return on asset A having a beta of 0.80 and asset B having a beta of 1.30.

d. Draw in the betas and required returns from part c for assets A and B on the axes in part a. Label the risk premium associated with each of these assets, and discuss them.

Reference no: EM131107316

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